Posting bellow describes setup Ubuntu Hardy PV DomU via attacment block device to Ubuntu Hardy HVM DomU at the same CentOS 5.2 Dom0. Standard debootstrap procedure has been used to create initial
image on this device. This step allows to avoid “scp” image files from remote Ubuntu HH box to Dom0 and use /dev/sda(X) with prepared image immediately on the same box,referencing the device from Ubuntu Hardy PV profile.
I’ve also attempted to install “ubuntu_desktop” on PV DomU and activate VNC. This procedure seems to have bugs during “ubuntu_desktop” install on image prepared via debootstrap. However, gnome desktop been installed
still appears to be able perform numerous useful functions.

However, Gnome still allows to perform numerous functions. For example:-

Regardless issue with with starting Gnome Setting Daemon, desktop allows to surf the Net, work with Open Ofice,operate with windows network shares on the LAN and etc.
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Update 10/24/08
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To fix the issue with Gnome Settings Daemon run :-
# gconf-editor
and disable mouse and keyboard plugins.